When the current round of fighting began in Gaza, it appeared to be another episode of a saga that began when Israel unilaterally withdrew from the territory in 2005, and then imposed a blockade in 2007, after Hamas took control of the strip.

This is the fourth major conflict between Israel and the Palestinian resistance factions in Gaza since then. When it began, the Israeli government's rhetoric suggested that it preferred a small, short-term conflict in which it would cause token damage to Hamas before returning to the status quo.

The Israelis have actually benefitted from Hamas rule in Gaza, in the sense that it has allowed them to play Fatah, which is dominant in the West Bank, against Hamas. The possibility that Hamas and Fatah might reconcile in a unity government seems to have been the main motivation for the Israeli Prime Minister Benjamin Netanyahu to launch the current round of fighting.

It appears, however, that Israel underestimated Palestinians' ability and willingness to fight. In Operation Pillar of Defence in 2012, Palestinians only caused six Israeli deaths, of which two were soldiers. Palestinians suffered 158 deaths, two-thirds of them civilians. In the 2008-2009 war, Palestinians suffered more than 1,400 deaths, around 200 of whom were fighters, while Israel suffered 10 deaths, seven of whom were soldiers.

Based on these precedents, the Israelis likely expected that they could carry out a limited operation in Gaza without suffering significant casualties. The fact that the Iron Dome is now fully operational, and seems to be effective, would have further justified that expectation.

A new dynamic

Although Israel continues to enjoy overwhelming firepower and has killed more than 800 Palestinians so far (75 percent of whom are estimated to be civilians), it is clear that the Palestinian resistance factions have improved their ability to fight on the ground, especially in urban combat.

Furthermore, the political calculus has changed. Increasingly isolated internationally by a hostile government in Egypt and a damaged relationship with Iran as a result of its support for the Syrian opposition, Hamas appears to have made the decision to go for broke. It has not wavered in its demand that a ceasefire include a permanent end to the Israeli blockade.

This position has increased support for Hamas on the Palestinian home front and helped to unite Palestinians behind a common agenda. The open intransigence of the Netanyahu government has left Palestinian President Mahmoud Abbas without a leg to stand on, and he has increasingly adopted Hamas's language and demands in recent days. He must also be concerned by the increased calls within his Fatah movement to renew military action against Israel.

Although the Israeli government has carefully crafted a narrative of major military accomplishments against a terrorist regime, the evidence suggests otherwise. All of Israel's 35 casualtiesbut three have been military. The use of rockets by the Palestinians puts pressure on the Israeli home front, but has caused few casualties and little material damage.

The most significant accomplishment of the rocket campaign has been to force western airlines to rethink using Ben Gurion International Airport. Since 90 percent of Israel's international air travel passes through this airport, any long-term decision by foreign airlines to avoid it would cause Israel significant economic problems. More immediately, the Israeli public finds itself more isolated.

Learning from Hezbollah

With regards to the ground combat operations, many Israeli and Arab commentators have compared it to the 2006 Lebanon war. In that war, Hezbollah used underground tunnels, advanced anti-tank weapons, and rockets fired against the Israeli home front to neutralise Israel's great advantage in fire power and force a stalemate that has held until now.

It is clear that the Palestinian resistance in Gaza has studied that conflict well and learned from Hezbollah's achievements. Nonetheless, there are certain fundamental differences. Hezbollah could count on Syria to provide strategic depth, which meant that Lebanese civilians had somewhere to flee and Hezbollah could use Syrian territory for logistical and other purposes.

In Gaza, there is no such option, especially since the Egyptian government has all but adopted Israel's position in this conflict. Egypt is preventing medical and other supplies from reaching Gaza, having already destroyed most of the tunnels that supplied Gaza from Egyptian territory. Most tragically, Palestinian civilians in Gaza have nowhere to seek refuge. Hundreds of thousands have already fled their homes, but there is nowhere in the crowded strip that is safe.

So far, Israel has failed to deliver a decisive blow to the Palestinian resistance. Most of the Palestinian leadership is literally underground and Israel's network of collaborators appears to have been seriously disrupted. Compared to past conflicts in which Israel has been able to kill significant numbers of Palestinian leaders with the help of human intelligence, this aspect of the operation has been a clear failure.

Increasingly, Netanyahu appears to be adopting more extreme tactics to produce a victory that would justify the loss of more than 30 Israeli soldiers. A return to the status quo may not be viable for either side, and one cannot expect a ceasefire to be reached soon.

It seems that the Palestinian-Israeli conflict stands at a crossroads. Israel has the military means to destroy the Palestinian resistance factions, but this would probably require re-occupying the entire strip. Doing so would entail a large number of casualties, and is unlikely that Israel could then withdraw anytime soon.

There has been talk in the Israeli press of turning over control of the strip to the Palestinian Authority, but it is unclear whether this is feasible, or even if the PA would survive the re-occupation of Gaza. For its part, Hamas cannot accept anything less than an end to the blockade without admitting defeat. It remains to be seen what course of action the Netanyahu government will adopt, but the intransigence of Israeli policy has pushed all of the parties into new territory from which there can be no easy exit.

Having left the Palestinians with no alternative but to fight, Netanyahu may have left himself with no choice but to go all the way and end the fiction of a peace process based on two states.

Adam Sabra is a professor of history, University of California, Santa Barbara.